SWS_Sample_Paper__updated3.26.21_.pdf

SWS Sample Paper: The Aerospace Industry

Maria Young SWS100

Professor Smith

July 31, 2020

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The Aerospace Industry

The aerospace industry plays a critical role in the economy as it is a major mode of

transportation for professional and personal travel. According to Business Insider journalist,

Frank Holmes, there are many airline companies, and the seven largest U.S. airlines include

Delta, Southwest, American, United, Alaska, JetBlue, and Spirit (1). Although airline travel is

an efficient way for individuals to connect, with advances in technology there is some decline

in travel for business purposes. The airline industry’s future is closely related to its

development of goods and services, significant technological and economic factors, and critical

industry trends.

Goods and Services

The airline industry provides a service in that it enables passengers to travel using

different types of planes and routes, based on different airlines. More airlines are also starting

to sell additional goods and services such as credit cards with airline miles, with the goal that

this will create loyalty to travel with a specific airline company. With respect to the service

provided by airlines, individuals will also see differences in price values based on their travel

preferences, such as the time of day, location of travel, type of aircraft, seating preferences

(first class versus economy), number of stops, and how early or late the flight was booked.

There are also additional factors that would impact the goods and services provided within this

industry because travel can be either domestic or international, and longer flights often provide

more services and amenities.

Economic Concepts

There are many economic concepts that relate to the airline industry, but this brief will

focus on the Law of Supply and Law of Demand. The Law of Supply would imply that airlines

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have the goal of maximizing their profit by having more flights running and charging a more

expensive price. Also, these airline companies would not want to send empty flights, so they

would also try to find flight times that might maximize their number of passengers per flight.

The Law of Demand would imply that customers will travel more if prices decline and are

more affordable.

There are often last-minute sales from the airline companies that are posted online with

the goal of encouraging more individuals to travel, since the price was reduced. Although

airlines will not receive full price on this individual’s ticket purchase, it will still help them to

reach their flight capacity. Another important economic concept that stems from these ideas of

supply and demand is competition. As prices and travel options fluctuate, individuals may look

at different travel alternatives or different airlines to reduce costs, leading airline companies to

evaluate their prices daily in comparison with competitor’s rates.

Economic Trend

Currently, there are over “42,000 flights and 2.5 million passengers” (Federal Aviation

Administration, 2). However, one notable trend over the past decade is an overall decrease in

business travel, as seen in the visual below from Snyder (3):

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In conclusion, as technology continues to advance, it will be interesting to see

what happens in the future, especially as both first (or business) and economy class

travel are on the decline.

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Sources

1. Frank Holmes. 2016. These Are the 7 Biggest US Airlines.

http://www.businessinsider.com/these-are-the-7-biggest-airlines-2016-4#1-delta-7

2. Federal Aviation Administration. 2017. Air Traffic by the Numbers.

https://www.faa.gov/air_traffic/by_the_numbers/

3. Brett Snyder. 2009. December Premium Air Traffic Down More Than 13 Percent.

https://www.cbsnews.com/news/december-premium-air-traffic-down-more-than-13-

percent/

http://www.businessinsider.com/these-are-the-7-biggest-airlines-2016-4#1-delta-7

https://www.faa.gov/air_traffic/by_the_numbers/

https://www.cbsnews.com/news/december-premium-air-traffic-down-more-than-13-percent/

https://www.cbsnews.com/news/december-premium-air-traffic-down-more-than-13-percent/